Quick look: Following a few years of drastic ups and downs, the National Association of Professional Employer Organizations (NAPEO) 2023 Q4 Small Business Snapshot shows promise of relative economic stability, ending the year on a high note. Though much is likely credited to benefits restructuring among small businesses, taking a look at the changes between Q3 and Q4 provides greater insight into where things are headed in this new year.
Every quarter, NAPEO delivers a small business snapshot with insights from specific areas to keep an eye for the coming months. Although there aren’t too many significant changes from Q3 to Q4, there is a greater sense of stability for small- and medium-sized businesses (SMBs), which is a welcome relief compared to years past.
For brokers, it’s a valuable time to revisit benefit plans which could help strengthen a SMB’s growth trajectory and give their strategies new life. As illustrated in the 2023 Q3 findings, this may include connecting with a professional employer organization (PEO) partner to start 2024 strong.
By comparing quarterly insights, it can help guide what actions may be most beneficial in the new year, and how brokers can better position their clients for success.
Mid-sized employers continue to grow
Though small businesses (0-19 employees) experienced a small dip (-0.2%) in growth, mid-sized businesses (20-49 employees) experienced a slight uptick (+0.3%) along with larger organizations.
It’s interesting to consider how much working with a PEO partner can help business growth over time. By delegating complex and time-consuming HR administrative tasks to a professional team of experts, small businesses can push beyond feeling static and into the next level of expansion. In fact, NAPEO also states that businesses in a PEO arrangement grow 7-9% faster.
Brokers who make this connection for their SMB clients grant them access to premium-level benefits and cost-effective HR management. In addition, PEO services can be used as an impactful growth tool to support long-term company goals, providing a competitive edge for both brokers and their clients.
SMB wages have increased 3.6%
With the rise in SMB wages over the past year, they are now closer to keeping pace with economic inflation. This contributes to the sense of stability employers feel compared to a few years ago. As employees move beyond the trend of transitioning from company to company, there’s newfound confidence in staying with their current job.
Working with a PEO partner ensures brokers’ clients remain at the forefront of compensation and benefit trends to keep them competitive. With retention being of great importance to a company’s success, having this as part of a full suite of HR services is valuable.
Unemployment rate remains historically low
According to NAPEO data, the national unemployment rate remains in the 3.8% range with some states dipping down as low as 2%. Also, hiring rates have slowed, which further shows people are finding their right fit. For several quarters, the focus has been on adapting to rapidly changing developments. But 2024 looks to be a time to build momentum and move forward more easily.
At the beginning of 2023, NAPEO shared 81% of SMBs reported interest in using a PEO. If the Q4 growth results are any indication, it looks like a majority of those interested took action and are now reaping the rewards.
How a PEO partner propels SMB growth
PEOs have become an increasingly popular option for brokers and SMBs in promoting growth while staying agile during economic changes. With greater SMB interest in PEO services, brokers can extend their offerings and elevate their advisory role.
A PEO partner like ExtensisHR provides brokers’ clients personalized experiences to match their unique demands. With decades-long experience in the industry, SMBs can rely on seasoned leaders to handle all of their HR needs, including HR administration, implementation, and support, benefit services, and risk and compliance management. Here are some of the highlights of services available:
Premium benefits at cost-effective rates
One of the main benefits of connecting with a PEO partner is access to Fortune 500-level benefits to attract and retain employees. Typically, larger businesses have the competitive edge with their list of offerings. However, part of the PEO advantage is it gives SMBs more equal footing when it comes to choosing from a top pool of talent.
People-first approach to planning
Not all benefits apply to businesses in the same way, which is why customization is essential. Unlike big-box PEOs which typically apply a one-size-fits-all solution, ExtensisHR focuses on quality and approaches benefit planning from a collaborative standpoint. Being invested in people and their specific needs (including tracking how they change) are what creates the most effective and successful outcomes.
Recruiting and retention management
Additionally, most PEOs offer recruiting and retention as an add-on service to their PEO offering. Whereas, ExtensisHR incorporates these areas into its full suite of HR services. With retention being an instrumental driver of growth, having the time and resources to handle it strategically helps to cut costs, improve productivity, and create new opportunities for business leaders and their employees.
Proprietary HR technology to advance growth
Meeting SMB leaders where they are is important. It’s important to make HR information easily accessible and easy to engage with. Through the Work Anywhere® platform and mobile app, HR administration, reporting, communication, and other tools and resources can be managed from anywhere, at any time. This proprietary technology gives SMB leaders an insightful look at their company’s performance and productivity to reach their goals, while employees get an efficient way to access and manage their important HR data.
Finding new footing in the new year
There’s a renewed sense of hope and optimism surrounding a new year, and what better time to put plans into action with a PEO. With an expert team dedicated to driving results, brokers can extend their network and strengthen their business relationships.
Starting 2024 strong with a solid HR foundation prepares companies for any developments and challenges to come.
Learn how we can support you and your SMB clients with our HR services. Contact ExtensisHR today.